One of my clients is a midsized logistics brokerage based in LA. Right now is RFP season, where they bid on freight contracts with various existing and potential customers. These contracts are typically one year long. A bid you submit now might be for a contract that goes Sept-Sept.
This is difficult even under normal circumstances because you have to predict what carrier (trucker) rates will be in the future. You also have to predict fuel costs, because even though these are usually variable, when fuel costs go up so does your margin (so if you expect higher fuel prices you can lower your bid price). And you have to game out what your competitors are going to bid too. You can’t be too conservative (expensive) or you won’t get the bid. But if you lock in a contract with a certain expectation of rates and it swings the other way, you’re on the hook for millions in losses.
Now imagine doing that normally difficult task in this environment. Who knows what will happen. Wars, a revocation of trucker drivers’ licenses (already happening in Cali), deportations, tariffs, the collapse of USMCA…the uncertainty is near endless. Big tech companies are doing great, everyone else is getting absolutely destroyed.
This is difficult even under normal circumstances because you have to predict what carrier (trucker) rates will be in the future. You also have to predict fuel costs, because even though these are usually variable, when fuel costs go up so does your margin (so if you expect higher fuel prices you can lower your bid price). And you have to game out what your competitors are going to bid too. You can’t be too conservative (expensive) or you won’t get the bid. But if you lock in a contract with a certain expectation of rates and it swings the other way, you’re on the hook for millions in losses.
Now imagine doing that normally difficult task in this environment. Who knows what will happen. Wars, a revocation of trucker drivers’ licenses (already happening in Cali), deportations, tariffs, the collapse of USMCA…the uncertainty is near endless. Big tech companies are doing great, everyone else is getting absolutely destroyed.